Obinna Chima
Considering the liquidity challenges and prevalent disequilibrium currently facing the Nigerian Foreign Exchange (FX) market, the FMDQ OTC Securities Exchange wednesday announced the suspension of the FMDQ Spot FX Closing Rate with immediate effect.
The move according to the Exchange was also to ensure transparency as well as to protect the integrity of the FMDQ Spot FX Closing Rate Methodology.
A statement yesterday explained that the Market Review Committee (MRC) of FMDQ charged with the responsibility of governing all FMDQ Markets, Standards and Benchmarks took the decision.
“Consequently, the daily Spot FX closing rate that FMDQ shall publish, will be the rate of the last available executed trade on the Thomson Reuters NGN=D1 module at 2:00 PM. This will be referenced the “CBN Closing Rate”.
” In line with FMDQ’s mandate to ensure that all FMDQ benchmarks (including closing prices/rates, fixings, indices etc.) are in line with international best practices, the calculation and publication of FMDQ’s Spot FX Closing Rate shall remain suspended until the general market structure promotes a more transparent and credible price formation,” it explained.
The FMDQ said it appreciates the importance of a market’s closing rate and will therefore continue to ensure the methodology remains as credible as possible.
“Consequently, the need for all market participants to play their parts in ensuring an FX Market aligned with global best practice is paramount. In line with FMDQ’s mandate to promote price discovery, there is the need to ensure FX trading activities in the market are fully captured to reflect the required transparency to all stakeholders.
“FMDQ had been concerned with the significance of confirmed trades on the designated FX Trading System which informed the Market Notice (MN-03) issued yesterday. However, it has received reasonable assurance that Dealing Member (Banks) [DMBs]/Authorised Dealers will promptly update their inter-Member trades and trades with clients on the designated FX Trading Systems accordingly.
“DMBs are also therefore encouraged to advise their clients to expedite action on the CBN FX onboarding directive for corporates to further enhance the transparency of the market. Based on the foregoing, DMBs are encouraged to confirm all trades and voice report trades done via other mediums (including telephones) during business hours (i.e. by 2:00 PM daily) on the designated FX Trading System,” it added.
